Legal news and management tips for emerging and mid-sized businesses.

Contract with the DoD, GSA or NASA? Make sure you review the new “Fair Pay” rule!

In late August, the Defense Department, General Services Administration, and NASA published a new rule and guidance implementing Executive Order 13673, Fair Pay and Safe Workplaces. The rule goes into effect on October 26, 2016.

One positive outcome of the comment period, the required disclosure reporting will be limited to one year and will be phased in over a three-year period (and, for the most part–there are always exceptions–no disclosures will be required from prospective prime contractors during the first six months*; subcontractors are not required to make disclosures until October 25, 2017). And, subcontractors will report directly to the DOL and then “make a statement” to the prime contractor about the DOLs response to the sub’s disclosures. It will be interesting to see how the DOL handles the direct subcontractor reporting and if this adds time to what can already be a lengthy procurement process.

One thing that didn’t change from the proposed rule is the requirement that prospective prime contractors publicly disclose basic information about covered violations–including the law violated, the case number, the date of the decision, and the governing body. The final rule requires public disclosure of not only final civil judgments or administrative determinations but also arbital awards (including those not finalized or under court review). And, because this disclosure is required by law, an exception in nearly all confidentiality provisions, a confidentiality clause likely won’t prevent a prime from having to disclose this information.

And, of note, the final rule clarifies the use of labor compliance agreements in the procurement process.

All in all, just a few more things for prime- and sub-contractors working with the DoD, GSA and NASA to work into the bidding and procurement process.

*However, as always, if an agency knows that a prospective prime contractor has had serious, repeated, willful or pervasive labor law violations in the prior three years, that contractor should still be prepared to address this part of the bidding process.